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Firstly, thanks a lot for your lectures they are amazing.
My question is:
Note 6 for this question include
– Legal fees in connection with an action by an employee for unfair dismissal £1,150
I suppose the Fees and Penalties are disallowed expenses as per lecture notes.
Do we have to add it back to the net profit?
My apologies for not having included this item of expense in the answer and thank you for bringing it to my attention – I thought the answer had been updated to include zero adjustment for both this and the debt collection.
Legal expenses to do with the trading activities of the business, for example dealing with employees and customers are allowable expenses – it is Fines (not fees) and Penalties that are disallowed.
Legal expenses of a capital nature would be disallowed.